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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Pensions: treatment of alternatively secured pensions from 6 April 2007: changes to procedures for charge under IHTA84/S151B

Where the charge arises under IHTA84/S151B, the procedures outlined at (IHTM17371) continue to apply with the following amendments

  • if the funds are to pass to charity within six months of the death, no charge will arise. The scheme administrator may deliver form IHT105 in such circumstances, which you can accept and issue SL124A and close the scheme member’s file.
  • where the scheme administrator delivers form IHT00 and 100g, you should assess tax in the normal way.

Where the chargeable value of the scheme member’s estate, ignoring the ASP, exceeds the NRB that applies on the dependant’s death (this is the relevant NRB, assuming that the application of that NRB results in a lower tax charge - IHTA14/S151BA(4)&(5)),the calculation is straightforward and the ASP will simply bear tax at 40%. You should create a new entry on COMPASS and select the ‘stats’ title ‘ASP fund chargeable on dependant’s death’.

Enter the date of the relevant dependant’s death or the date they ceased to be a relevant dependant as the Date of Transfer/Event. You should show the remainder of the scheme member’s (not the relevant dependant’s) chargeable estate in the ‘Aggregate chargeable estate’ box (what is the PLCT box on ‘normal’ calculations). Unless there are any valuation issues with the ASP funds, the liability will be settled without reference to the remainder of the estate to be settled, so you can issue closure letter SL124A for the ASP charge once the tax has been paid.

The IHT charge following the relevant dependant’s death does not affect the tax payable on the estate of the scheme member, nor does it affect the tax payable at the relevant dependant’s own estate.

Where the chargeable value of the scheme member’s estate, ignoring the ASP is less than the NRB and the IHT charge arises before the UP charge, you will need to follow the relevant example at IHTM17412.